Combine sugar, water and vanilla extract in medium saucepan. Stir until the sugar is somewhat dissolved. Cook over medium-high heat and boil, without stirring, until caramel turns a copper brown color. This can take anywhere from about 6-12 minutes.
Using either a heavy dish towel or oven mitts, grab the saucepan handle and quickly and carefully pour the caramel over bottom of your flan mold, bundt pan, or Pyrex dish. Please be careful because the caramel will be extremely hot, and seriously – You will not enjoy a sugar burn.
Immediately following the caramel, pour the custard into the mold, pan, or dish. Arrange in the center of a large roasting pan.
Pour boiling water into the roasting pan until it comes about halfway up the side of your flan vessel. Bake for 60-80 minutes or until knife inserted near center comes out clean. When nudged the flan should jiggle a bit. If you are using ramekins, begin to check at around 40 minutes. Cool the flan for about 30 minutes, then cover and chill in the fridge for several hours or overnight.